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The 15-story office tower in downtown San Jose at 160 W. Santa Clara St. A
downtown San Jose office tower has been bought for more than $100 million
by East Coast investors at a huge profit over a the prior purchase of the
high rise, an acquisition that points to rising interest in buying pieces
of the city’s urban core.
George Avalos / Bay Area News Group

The 160 West Santa Clara Street office tower in downtown San Jose. A
downtown San Jose office tower has been bought for more than $100 million
by East Coast investors at a huge profit over a the prior purchase of the
high rise, an acquisition that points to rising interest in buying pieces
of the city’s urban core.
George Avalos / Bay Area News Group

Fremont Bank, ThreatMetrix and KBM Hogue are among the tenants in an office
high rise at 160 W. Santa Clara St. in downtown San Jose. A downtown San
Jose office tower has been bought for more than $100 million by East Coast
investors at a huge profit over a the prior purchase of the high rise, an
acquisition that points to rising interest in buying pieces of the city’s
urban core.
George Avalos / Bay Area News Group

The 160 West Santa Clara Street office tower in downtown San Jose. A
downtown San Jose office tower has been bought for more than $100 million
by East Coast investors at a huge profit over a the prior purchase of the
high rise, an acquisition that points to rising interest in buying pieces
of the city’s urban core.
George Avalos / Bay Area News Group

ThreatMetrix, a tech company, is a prominent tenant in a downtown San Jose
office tower at 160 W. Santa Clara St. A downtown San Jose office tower has
been bought for more than $100 million by East Coast investors at a huge
profit over a the prior purchase of the high rise, an acquisition that
points to rising interest in buying pieces of the city’s urban core.
George Avalos / Bay Area News Group

SAN JOSE — A downtown San Jose office tower has been bought for more than $100 million by East Coast investors at a huge profit for the seller over the prior purchase of the high rise, an acquisition that points to rising interest in buying pieces of the city’s urban core.

Boston-based Beacon Capital Partners, acting through affiliate BCSP 160 Santa Clara, bought the 15-story office tower on April 20 for $101.5 million, or 25 percent above the $81 million that seller BIT Holdings Seventy Five paid for the prominent building in 2014. Situated right across the street from San Pedro Square, the 226,000-square-foot tower prominently sports the logo of one of its tenants, cyber security firm ThreatMetrix.

“It’s unbelievable what’s going on with property prices in downtown San Jose,” said Mark Ritchie, president of Ritchie Commercial, a realty brokerage. “The investors are coming to San Jose.”

Experts say a widening array of development and investment activity is helping to drive up downtown property values.

“If commercial properties and land prices keep going up, we can expect that rents will catch up, too, and head higher,” said Scott Knies, executive director of the Downtown San Jose Association.

Much of this is being driven by a Bay Area and Silicon Valley economy that has surged, combined with specific development plans such as Google’s proposed transit-oriented community near the Diridon transit station and SAP Center. In addition, Adobe Systems intends to dramatically expand its three-building campus in downtown San Jose by adding a fourth office tower on an adjacent parcel.

“All the activity by companies like Google and Adobe is increasing the interest in the downtown,” Ritchie said.

Mountain View-based Google, since December 2016, has completed, or committed to, property investments totaling roughly $350 million on the western edges of downtown San Jose, acting through its own affiliates or through partnerships with a development ally.

Google has proposed development of an integrated mixed-use community of offices, residences, retail, restaurants, open spaces and amenities totaling 6 million to 8 million square feet near the train station. Eventually, Google could employ 15,000 to 20,000 people in the development.

In addition to 160 W. Santa Clara St., several other high-profile properties in downtown San Jose have traded hands recently, much of the activity coming on the heels of disclosures about Google’s development interest in the urban core.

“This deal and other ones show strong belief in the downtown market,” Ritchie said. “Markets are 80 percent belief and 20 percent facts.”

In June 2017, Aju Hotels and Resorts, a Korean resorts operator, paid $64 million for the Westin San Jose, known as the Sainte Claire hotel, far above the prior sales price of $16 million for the 171-room iconic lodging.

Boston-based AEW Capital Management bought the 303 Almaden office building, at West San Carlos Street and Almaden Boulevard, in July 2017 for roughly $80.2 million — a price of $509 a square foot that’s believed to be a record high for prime offices in downtown San Jose.

In August 2017, the 360 Residences, a 23-story, 213-unit residential tower, was bought for $133.5 million, a 13 percent jump from what it sold for in 2012.

Small buildings also are getting plenty of interest. On April 12, San Martin-based investors paid $10.6 million for offices fully leased to software firm Wrike at 70 N. Second St. That’s about three times the property’s $3.25 million sale price in 2015.

The 160 W. Santa Clara St. building sale and the other transactions also suggest interest from diverse groups in the downtown.

“The building is in a sensational location and it will be a great long-term play,” Knies said.